Income statement data for Winthrop Company for two recent years ended December 31 are as follows:

	Current Year			Previous Year
Sales	$2,240,000			$2,000,000
Cost of goods sold	(1,925,000)			(1,750,000)
Gross profit	$315,000			$250,000
Selling expenses	$(152,500)			$(125,000)
Administrative expenses	(118,000)			(100,000)
Total operating expenses	$(270,500)			$(225,000)
Income before income tax expense	$44,500			$25,000
Income tax expense	(17,800)			(10,000)
Net income	$26,700			$15,000

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.

Winthrop Company Comparative Income Statement For the Years Ended December 31

	Current year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
Sales	$2,240,000	$2,000,000	$fill in the blank 3b518afdf01ffe0_1	fill in the blank 3b518afdf01ffe0_2%
Cost of goods sold	(1,925,000)	(1,750,000)	fill in the blank 3b518afdf01ffe0_3	fill in the blank 3b518afdf01ffe0_4%
Gross profit	$315,000	$250,000	$fill in the blank 3b518afdf01ffe0_5	fill in the blank 3b518afdf01ffe0_6%
Selling expenses	$(152,500)	$(125,000)	fill in the blank 3b518afdf01ffe0_7	fill in the blank 3b518afdf01ffe0_8%
Administrative expenses	(118,000)	(100,000)	fill in the blank 3b518afdf01ffe0_9	fill in the blank 3b518afdf01ffe0_10%
Total operating expenses	$(270,500)	$(225,000)	$fill in the blank 3b518afdf01ffe0_11	fill in the blank 3b518afdf01ffe0_12%
Income before income tax expense	$44,500	$25,000	$fill in the blank 3b518afdf01ffe0_13	fill in the blank 3b518afdf01ffe0_14%
Income tax expense	(17,800)	(10,000)	fill in the blank 3b518afdf01ffe0_15	fill in the blank 3b518afdf01ffe0_16%
Net income	$26,700	$15,000	$fill in the blank 3b518afdf01ffe0_17	fill in the blank 3b518afdf01ffe0_18%

b. The net income for Winthrop Company increased between years. This increase was the combined result of an

increasedecrease

in sales and a

higherlower

percentage

increasedecrease

in cost of goods sold. The cost of goods sold increased at a

slowerfaster

rate than the increase in sales, thus causing the percentage increase in gross profit to be

greaterless

than the percentage increase in sales.